Grocery E-commerce in China, easier?
Recently, google announce it’s going to close down the grocery delivery service. This tech company has been successful in creativity, got talents, but can’t figure out what’s going on in grocery E-commerce. Is it that hard?
Google Express is the service provided based on Google’s best search engine, it uses its search engine to provide online shopping service, including grocery delivery in the Bay Area. But, it failed in somehow. Google’s sales Director said: “We have tried different things and products to figure out how to do this business, now I think we got it.” By saying that, he means Google will focus on consumer goods but not the fresh delivery, the vendors are Target, Walgreens, Costco, Rei national wide.
Amazon Fresh (will be in the coming blog….)
Google is serious about entering the E-commerce, and their biggest competitor in North America market is Amazon, which already have the business in fresh delivery.
Chinese fresh E-commerce
The fresh E-commerce business is in two extremes. Lots of start-ups go bankruptcy because running out of cash flow, qingcai, guoshibang, aixianfeng, yummy77, without the capital, it’s hard for them to survive. On the other hand, yiguo.com is getting it’s round C from Alibaba, fruitday.com got it’s 0.1 billion US dollar D+ round from Zhangjiang Holding, a government owned fund management company. Missfresh.com and benlai.com got their round C respectfully.
According to a recently released report by China Agricultural and grocery E-commerce. There are over 120 Grocery E-commerce companies in China, and lots of them are doing business in the Coast area in China.
No matter what the fresh E-commerce business or traditional E-commerce, it’s not build a website or send some like, it’s about connect the industry more effectively, so the cost of the customer on acquiring what they want is lower. The grocery delivery E-commerce is not a blue ocean anymore, with more capital, yiguo.com and fruitday.com will be the main player with more resource, while the other ones is going to strive to make a living
How do they make money?
Every business needs to make money. no matter what business model you are using, income is important. For grocery E-commerce, there is a loss rate. The value of fresh product decrease in seconds will be throw away in days. Because the grocery products need to keep the freshness and quality, it’s hard for the quality control.
Supply chain and operation is the key for the business, and this is a money absorber. With more funds, companies could build its own delivery service and storage. But, what people do when they don’t have that much money?
First, 2B, this will reduce the frequency of delivery, and shrink to region covered and make bigger deals.
Second, 020, this will get us offline traffics, and bring more customers online
Third: Hema grocery. Open a supermarket and offers delivery service covers the region. You get both.
What China got advantage at?
Of course, market! But, because this country is in a long history of agriculture, the production is low efficient, compared to the US, there is no standard or association, it makes the quality control hard, which makes the grocery quality varies. It makes the international competitor got a chance on that.
Second, population density, which makes the delivers service less costly. But, without the standard packaging and delivery service, the customer experience is bad. A grocery delivery service is not just delivery, but also bring an experience of convenient, valuable and effective way of grocery shopping.
Third, rising buying power. With the fortune created in the society, coming along with the food security issue, Chinese customer are in a huge desire for the high-quality food imported oversea with standard. So there is a need, there is a market.